Research on semistrong form efficient markets indicates which one of the following is correct?
A)Identifying a stock with repetitive price movements is generally the best method of active investing.
B)Future returns on large company stocks tend to closely follow past pricing patterns.
C)Buying and holding a broad market index is one of the best investment strategies.
D)Predicting future stock prices is relatively easy for academic researchers.
E)Trading costs have little, if any, impact on investment returns.

Question

Quizplus · Accepted Answer

Semistrong form efficient markets suggest that it is difficult, if not impossible, to consistently identify stocks that will outperform the market based on repetitive price patterns or past performance. Therefore, buying and holding a broad market index is considered one of the best investment strategies. This is because the market is already efficient at processing and reflecting all available public information in stock prices. Trading costs can still have an impact on investment returns, so minimizing these costs is important.

Research on Semistrong Form Efficient Markets Indicates Which One of the Following